Direct Taxation Including Tax Incentives

The economic advantages of setting up a company in Malta are multiple. Chief amongst them however, is the taxing system and incentives put in place to attract businesses to the island. Here at TACS Malta we can provide guidance on the benefits reaped in this regard, upon registering a company in Malta.

A corporate company in Malta is taxed at 35% on chargeable income. However, Malta is the only EU member state which enjoys the Full Imputation System. In such a system, the shareholders of a company are entitled for a tax credit amounting to the tax paid by the company upon distribution of profits. This credit scheme is eligible for both residents and non-residents and is compliant with the EU. One of the credit method’s main aims is to waive double taxation, ensuring incoming income from overseas is not taxed twice in the hands of two different persons. The system therefore, sees shareholders of a Maltese company, able to claim back 6/7ths of tax paid on the profits earned from trading activities and 5/7ths on passive income and royalties. If the company claims double taxation relief on foreign tax already suffered, the tax rate can be further reduced to 0%. Refunds to shareholders in this case will amount to 2/3rds.

Tax treaties have been signed with over 70 countries, with a number of others currently pending. Countries such as China, the US, the UK, India, Singapore, South Africa, Sweden, Germany and Hong Kong have signed and ratified treaties with Malta, thus encouraging international trade and helping Malta-based companies benefit from lower taxes. Apart from individual agreements set in place, Malta also enjoys a number of other tax reliefs, including the Commonwealth relief, unilateral relief and a flat rate foreign tax credit. This means that it is possible for a company to avoid double taxation on revenue coming from abroad with countries with whom there are no tax treaties brokered.

The Maltese Government has a long-standing history of supporting local businesses, especially in their vulnerable first steps into the business world. Micro-Invest, aimed at companies with under 50 employees and a turnover of less than €10,000,000 can benefit from investment meant for innovation, expansion, improvement and development within the company. Companies may benefit from 45% return on costs in tax credit, not exceeding €50,000 for a Malta based company and €70,000 for a Gozo based company or for a company owned by a female undertaking, respectively. Investment Aid Tax Credits, aimed at SMEs and large companies, also encourage direct investment in Malta by allowing companies to benefit from up to 35% of tax credits on expenditure that meets a number of requirements. Indeed, the Malta Enterprise – the organisation that launched both schemes described above – promotes companies at all stages of growth to improve their performance, making sure all stakeholders may benefit from it too.

While businesses from an array of industries may make use of these benefits, Malta has also set aside particular incentives for the Film Industry. The islands have long been targets of directors and producers, with its well preserved fortifications, its ease of access to different locations due to their proximity to each other as well as the natural beauty of the island. Blockbuster movies like Gladiator and Troy have been filmed on our shores, with scores of other movies like By the Sea and Assasin’s Creed, along with all the A-listers which accompanied these productions, having graced our islands. Malta has therefore set up a number of fiscal incentives to alleviate production costs and attract more investment to the island. Investment Aid in tax credits, cash grants, exemption on royalty income derived from copyrights and the ‘Create’ scheme, all aim to give a boost to productions in terms of taxation costs.

At TACS Malta we have the right expertise to cover guidance on direct tax and incentives no matter which industry you belong to. Talk to us today and we’ll set you along the right path for a better investment.

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At TACS Malta, our aim is to provide solutions to individuals and small to medium-sized businesses in a timely, effective manner.

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At TACS Malta, as a family-run business, we will provide our clients’ with a personal and empathetic service.

Business Information

TACS Malta is a family firm with an entrepreneurial approach. Our aim is to provide solutions to individuals and small to medium-sized businesses in a timely, effective manner. We can assist both established firms with innovative solutions, as well as those embarking on setting up a new business in Malta. As a family-run business, we understand our clients’ need for a personal and empathetic service; qualities especially appreciated by high net worth individuals who are exploring the opportunity to relocate to Malta with their families.